The filing shows that PointCast has been losing money since its inception in July 1992, and faces intense competition. It also shows that the company's highly touted chief executive, David Dorman--recruited from SBC Communications to help take the company public--is receiving a generous compensation package in stock options and bonuses that could run into the tens of millions of dollars.
As previously reported by CNET's NEWS.COM, PointCast was gearing up for an IPO filing this month--earlier than many people had expected.
According to a registration statement filed with the Securities and Exchange Commission, the company registered 4,312,500 shares at a maximum proposed offering price of $12 per share, bringing the proposed maximum offering price to $51.75 million. Minus overallotments, the total comes to 3.75 million shares.
Some 21,337,112 shares will be outstanding after the offering, so the company would have an implied market valued of up to $256 million. The offering price range is between $10 and $12 per share.
PointCast's technology, which pushes news and other information from the likes of CNN and the Wall Street Journal to users' desktops, has caught on much more slowly than expected. Many analysts think PointCast missed its best opportunity by not closing a deal to sell out to Rupert Murdoch's News Corporation last year.
Still others think the timing for a PointCast IPO may be right, citing the sharp run-up in Net stocks, Wall Street's love affair with content-focused Net companies, and the recent IPO filing by software firm Inktomi. They add that a PointCast public offering may prompt other push companies, such as Marimba, to go public. Marimba wouldn't comment on its intentions.
The SEC filing said that PointCast lost $6.4 million for the three months ended March 31, compared with a loss of $6.2 million for the like period a year ago. Its quarterly revenue for that period was $5.1 million, up from $3 million reported for the same year-ago period.
The company lost $29.1 million for 1997, on revenue of $18 million, compared with a loss of $15.1 million on revenue of $5.2 million posted for 1996.
The filing added: "The company does not expect significant growth, if any, in revenue for at least the next two quarters, and the company expects to incur increased net losses for at least the next two quarters, and significant net losses for the foreseeable future."
Among other risks, PointCast also faces a possible licensing dispute with Unisys, although the company is "currently reviewing the matter" to determine "the scope of the claims and its response," the filing states. It says such intellectual property claims occur from time to time.
It also stated: "The company intends to use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures, and for the expansion of its sales capabilities and marketing efforts. In addition, the company may use a portion of the net proceeds of the offering to acquire or invest in complementary businesses, technologies, services, or products."
PointCast does not anticipate paying dividends.
The company's employment contract with the 44-year-old Dorman,
Dorman received nearly 1.7 million stock options last year, with an exercise price of $6 per share, and also got an additional 83,334 stock options with an exercise price of $14.25 per share.
All told, the potential realizable value of the options is about $7 million if the stock appreciates at a rate of 5 percent annually, and $17.8 million if the stock appreciates at a rate of 10 percent annually for the term of the options. Many Internet stocks are increasing in value at a much greater rate.
Chris Hassett, PointCast's cofounder, received no stock options last year.
The filing also shows that Dorman owns 2 million shares in PointCast. His stake will total 8.7 percent after the IPO.
Hassett owns 1.6 million shares, for a 7.4 percent stake, making the holdings worth nearly $20 million at $12 per share.
Earlier this week, Pointcast said that three of its affiliates--the New York Times, Wall Street Journal, and the Boston Globe--renewed their contracts to supply news to the company's network for a one- to two-year period.